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    Macroeconomics and the Financial System
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    Exam 12: Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment
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    Assume That an Economy Has the Phillips Curve π =
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Assume That an Economy Has the Phillips Curve π =

Question 29

Question 29

Multiple Choice

Assume that an economy has the Phillips curve π = π -1
- 0) 5(u - 0.06) . How many percentage point-years of cyclical
Unemployment are needed to reduce inflation by 5 percentage points?


A) 20
B) 10
C) 5
D) 2.5

Correct Answer:

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